As a forensic accountant specialising in fraud and financial crime I often accept money laundering cases involving hiding stolen cash and Hawala. I am an independant expert. This means that my only goal is to present a report that is both clear and non-partisan. In most cases, this assists the prosecution and the defence because it achieves a fair outcome.
Hiding stolen cash is not something a reasonable person would ever condone. However, when the authorities accuse somebody of money laundering, either side must present their case properly. Over the years I have considered many money laundering cases for police forces, the Criminal Prosecution Service and for defence lawyers on behalf of their clients. I have seen Hawala transferring substantial amounts of legitimate funds around the world. I have also seen the system easily hijacked by organised money laundering gangs.
Is Hawala A High Risk Area For Hiding Stolen Cash?
A properly run Hawala agency is no different from a mainstream bank such as Lloyds or Barclays. In the UK it must register with the Financial Conduct Authority. HM Customs & Revenue will monitor such a business on an ongoing basis. I have routinely worked with such businesses when carrying out non-statutory audits of their procedures. There is no reason to suggest that these businesses, like many leading high street concerns such as Western Union or MoneyGram, are anything other than above board.
However, ethnic communities that have migrated to the UK are the main users of Hawala. It is fair to say that these communities retain many of their customs, habits and preferences from their homelands, even many decades after emigrating. I have seen a marked preference of certain groups to use cash. Some are comfortable dealing in large quantities of cash on very informal bases. They often resent what they see as the overbearing nature of a regulatory framework. They see Hawala as a natural choice for sending and receiving money to and from their homeland. Many perceive Hawala to be a more familiar and less administratively burdened system.
Not All Hawala Agents Are The Same
Because of its popularity with groups that prefer informal and familiar agents when dealing with their money transfers, Hawala attracts operators who are more likely to flaunt regulations. There are some that prefer to operate in a completely unregulated fashion by “underground banking”. This is how a much larger proportion of informal value transfer is conducted abroad than in the UK. However, I am seeing an increasing number of cases recently involving unregistered Hawala agents in the UK.
Unregistered Hawala that is outside the scrutiny of the UK regulators is highly illegal. This is because it is vulnerable to being used by crooks to hide stolen money. If a Hawala agent fails to check the provenance of the customer and the cash they wish to send, as they must do to comply with anti-money laundering regulations, they may accept large quantities of criminal street cash, i.e., the proceeds of crime.
Support The Regulated Hawala Businesses
Properly run Hawala agencies fulfil a valuable social and economic purpose. They offer a culturally acceptable mechanism for transferring money and often operate in areas where mainstream banking is sparse or non existent.
However, the biggest risk is ensuring that the UK Hawala agency deals only with registered networks abroad, and only reputable agencies are sending your money to the UK. Otherwise, when expecting the arrival of that inheritance from India, you receive a call to collect the money in cash from an unknown person in Tesco’s car park, you will know that the criminals have hijacked your transaction. Don’t complain when the police who are monitoring the criminals arrest you and seize your money!